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TMI Blog2014 (5) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Smt. K.Harita For the Respondent : Shri A. Srinivas ORDER Per Smt. Asha Vijayaraghavan, Judicial Member: This appeal by the Revenue is directed against the order of the Commissioner of Income-tax(Appeals)-V, Hyderabad dated 29.10.2012, for the assessment year 2006-07. 2. Effective grounds of the assessee in this appeal are as follows- 1. The order of the learned CIT(A) is erroneous on facts and in law. 2. The learned CIT(A) ought to have confirmed the addition, as the Assessing Officer has completed the re-assessment proceedings basing on facts and material available on record. 3. The learned CIT(A) ought to have confirmed the addition made by the Assessing Officer, who has completed re-assessment bringing to tax the gift received by the assessee from his own HUF u/s. 56 of I.T. Act. 4. The case falls under exceptionary clause as per CBDT's instruction NO.3/2011 dct.09.02.2011 since the assessment under dispute was a result of remedial action to an Audit Objection of Revenue Audit. Therefore, even as per CBDT's Instruction No.3/2011, this is a fit case for fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the HUF giving a gift to its members is a relative or a group of relatives giving gifts to another eligible relatives. He further contended that the definition of relative, as per S.56(2)(v) of the Act is very wide and a small set of relatives form the members of the HUF and a small group of eligible relatives and who are members of an HUF can extend the gifts to another eligible relative. He relied on the decision of the Rajkot Bench of the Tribunal in the case of Vineet kumar Rajharibhai Bhalodia (46 SOT 97). The CIT(A) found merit in the contentions of the assessee. He observed that though HUF is not clearly mentioned in the definition of relative, clause (vi) sates 'any lineal ascendant or descendent of the spouse of the individual' as coming within the scope of the term 'relative'. As opined by the Tribunal in the case relied upon by the learned Authorised Representative before him, the CIT(A) noted that HUF constitutes all persons lineally descended from a common ancestor and includes their mother, widows and unmarried daughters. All these persons fall in the definition of 'relative' provided in the explanation to clause (vi) of S.56 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative section i.e. section 56(2)(v) was in respect of(i) individual, and (ii) Hindu Undivided Family (HUF). Meaning thereby the legislature has clear intention to include both the statuses i.e. Individual as well as HUF within its scope; as well as; within its operation. Thus, the Section is applicable in respect of money exceeding Rs.25,000/- received without consideration either by an individual or by a HUF . Now we read the proviso annexed to sub-section (v) that the charging clause shall not apply to any sum of money received from any relative. Meaning thereby the proviso is applicable to both of them i.e. individual as well as HUF . The donor-relative can be either relative of Individual or HUF ;as the case may be. In other words, if an amount exceeding Rs.25,000/- is received as a gift either by individual or by HUF , then such an amount is chargeable to income under the head Income from other sources but an exception is provided in the first proviso that the said clause of charging the amount totax should not apply to an amount received from any relative. We hereby thus interpret that the proviso prescribes that the charging of the gifted amount shall not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of Vineetkumar Raghavjibhai Bhalodia vs. ITO reported at (2011) 140 TTJ (Rajkot) 58. In that cited decision, an individual has received a gift from HUF. The AO was of the view that the HUF being not covered within the definition of relative , therefore the gift received by the individual from the HUF was taxable. The Respected Bench has commented that as per the definition of person defined in section 2(31) includes HUF . Therefore a HUF is distinctly assessable to tax as a person under the IT Act. The Bench has observed that, quote Therefore, the expression HUF must be construed in the sense in which it is understood under the Hindu law as has been in the case of Surjit Lal Chhabda vs. CIT 1976 CTR (SC) 140 : (1975) 101 ITR 776 (SC). Actually an HUF constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. All these persons fall in the definition of relative as provided in Explanation to cl.(vi) of s. 56(2) of the Act. The observation of the CIT(A) that HUF is as good as 'a BOI' and cannot be termed as relative is not acceptable. Rather, an HUF is 'a group of relativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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